Stocks perform better with diverse leadership

A report by Credit Suisse released late last month shows that boards with greater gender diversity outperform those that are male dominated.

In their analysis, they found that US companies that had at least one women on the board “would have outperformed stocks with no women on the board by 26 percent” since 2005. They found that the largest effect came post the GFC and suggest that “stocks with women on board are more likely to have lower levels of gearing … Lower relative debt levels have been a useful determinant of equity market outperformance over the last four years, delivering average outperformance of 2.5 percent per annum over the last 20 years and 6.5 percent per annum over the last four years.”

They credit the outperformance to six factors:

(1) A signal of a Better Company

(2) Greater Effort Across the Board

(3) A Better Mix of Leadership Skills

(4) Access to a Wider Talent Pool

(5) A Better Reflection of the Consumer Decision Maker

(6) Improved Corporate Governance

These findings are very similar to those demonstrated in the board research conducted by Gender Worx in late 2010 (Gender Agenda) and which related to board performance of gender-diverse versus male-dominated boards in Australia and New Zealand.